DeFi has a major problem. A potential Sparkpool solution will be launched this month

DeFi has a major problem. A potential solution from Sparkpool will be launched this month - Ethereum Sparkpool 1024x683Ethereum Sparkpool mining pool will launch its new mining network, Taichi Network, complete with a "private transaction" feature in October, Sparkpool co-founder Xin Xu confirmed.

The new features of Taichi

The network "will gradually go online" this month in what could be a solution to the age-old problem of decentralized finance (DeFi) with front running, the practice of trading based on information on future transactions contained in the transaction queue of a blockchain in the cryptocurrency markets.

Taichi's features "are not designed for selfish use" but rather for the "public good" of the Ethereum ecosystem (here quotation in real time), Xu said. “We will offer the capabilities of the Taichi Network as an infrastructure to the Ethereum [ecosystem] and see what the reaction will be,” he said. Sparkpool currently makes up 23% of Ethereum's hashing power, according to Etherscan.

The dark forest of Ethereum

Ethereum's transaction queue, called mempool, is often referred to as a “dark forest” due to arbitrage bots acting like predators who spy on transactions.

First coined by Dan Robinson of venture capital firm Paradigm, the “dark forest” metaphor describes robots lurking in a blockchain's mempool to copy and execute profitable trades before the original is executed.

Bot arbitrage has long troubled Ethereum and is specifically described in a 2019 Cornell University paper titled "Flash Boys 2.0". Profits earned by arbitrage bots have skyrocketed in recent months averaging 2.000-3.000 ETH per day at the height of the DeFi boom in early September. However, private transaction networks like Taichi can draw a path through the trees.

The mining party, in this case Sparkpool, chooses not to transmit the chosen transaction intended for its block to the rest of the network. By not communicating to other mempool lurkers, the miner's transaction gains a higher degree of security from the bots.

On the other hand, you are entrusting your transaction entirely to Sparkpool, which means that the mining giant could do front running more easily. Xu said stopping the current peak problems plaguing DeFi transactions "is definitely a direction worth exploring" with Taichi.

The early days of Taichi

Some aspects of the Taichi Network are public, including a general domain registered in July 2020, according to WHOIS. The website remains under construction, but describes Taichi as a viable “Ethereum Proof-of-Stake (mPoS) sidechain” complete with relayer and smart contract capabilities.

Relayers broadcast transactions faster than regular blockchain contracts by building paths between main nodes. Both Bitcoin and Ethereum have their own relay networks, such as FIBER and BloXroute.

The Sparkpool GasNow data website also includes information on Taichi, describing the network as "greatly improving the efficiency of transmitted transactions", "directly pushing received transactions into a mining pool mempool".